The Effect of Ownership Structure on Firm Value in Indonesia

Dewata, Evada and Isnurhadi, Isnurhadi (2012) The Effect of Ownership Structure on Firm Value in Indonesia. EBES 2012 Istanbul Conference . Sazak Ofset, Istanbul, Turkey, pp. 440-460. ISBN 978-605-61069-5-8

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      The company owner plays an important role in company performance. The company owner can be classified into several categories (ownership structure types). And, it has been well-known that type of ownership has different impact on the value of firm. Therefore, it is interesting to deeply look at Indonesian setting with a unique evolution of firms. In Indonesian companies’ ownership structure is very unique. Most Companies in Indonesia evolved from a single-owner firm into a conglomerate (firm with many branch firms but small in size). The ownership and control are on the hand of a founder/s and his/her family members. Consequently, one family controls a lot of firms. Recently, the companies have surrendered a small portion of ownership but the control remains with the family founder. This study aims to identify and analyze the influence of managerial ownership, institutional ownership and foreign ownership on the value of firm. Research was conducted on manufacturing companies listed in Indonesia Stock Exchange (BEI) in the period of 2004-2008 with a sample of 455 firms. Dependent variable used in this study is value of firm (as proxied by market capitalization) and independent variables consist of managerial ownership, institutional ownership, foreign ownership and control variables (size and leverage). Panel data analysis with fixed effect model is employed to analyze the data. The results shows that simultaneously, managerial ownership, institutional ownership, and foreign ownership significantly influence the value of firm on manufacturing companies listed in Indonesia Stock Exchange. Furthermore, managerial ownership and institutional ownership have negative significant impact on firm value. This finding is consistent with theory and a number of empirical studies. On the other hand, foreign ownership has no significant impact on the firm value. Thus, it does not enough evidence that foreign ownership has impact on the firm value.

      Item Type: Book
      Uncontrolled Keywords: Ownership Structure, Managerial Ownership, Institutional Ownership, Foreign Ownership, Firm of Value.
      Subjects: H Social Sciences > HG Finance
      Divisions: Faculty of Economics > Department of Management
      Depositing User: Isnurhadi, SE, MBA, Ph.D
      Date Deposited: 12 Mar 2014 11:22
      Last Modified: 12 Mar 2014 11:22

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